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Chemicals at risk in spat with China

Trade in chemicals between the U.S. and China is robust and roughly equal

by Jean-François Tremblay
March 26, 2018

No one knows yet what products will be hit as part of a Trump administration plan to impose tariffs on Chinese imports, but chemicals are unlikely to emerge unscathed from any U.S.-China trade conflict.

President Donald J. Trump announced on March 22 that the U.S. will impose tariffs on about $60 billion worth of Chinese goods to punish the country for technology and trade-secret theft. The White House says it will reveal the list of goods within 15 days of Trump’s announcement.

U.S.-China chemical trade

Unlike manufacturing overall, chemical trade was roughly in balance last year.

Organic chemicals $3,668 $7,449
Pharmaceutical products 3,375 1,257
Inorganic chemicals 900 1,239
Dyes and pigments 499 545
Fertilizers 56 106
Other chemicals 6,079 3,351
Total, chemicals 14,577 13,947
Total trade, all commodities 149,661 431,783

Sources: Customs General Administration of the People’s Republic of China, C&EN calculations

The plan followed a separate U.S. proposal to impose tariffs on aluminum and steel produced in China and other countries.

In response to the March 22 announcement, China threatened a countermeasure that would target about $3 billion worth of American goods, including fresh fruit, nuts, and wine. Officials hinted that a fuller response could follow.

In a statement, the Chinese embassy in the U.S. vowed that “if a trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures.”

Even before the U.S. announcement, chemicals were vulnerable to trade conflicts. In a preliminary ruling last month, China’s ministry of commerce found the U.S., Taiwan, and South Korea guilty of dumping low-priced styrene in China. The ministry demanded that manufacturers from those countries immediately pay a deposit in anticipation of new tariff duties if the final ruling confirms the dumping.

Chemicals represented about 10% of total U.S. merchandise exports to China in 2017. The proportion rises to more than 14% if plastics are included. The $21.5 billion worth of chemicals and plastics that the U.S. shipped to China last year was more than the $19.5 billion in agricultural products that it shipped. From China’s perspective, chemicals were about 3% of all the goods shipped to the U.S.



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Bennett (March 27, 2018 11:56 PM)
Punish China for technology and trade-secret theft? I admit that there are still many intellectual property violations in China but it is not as serious as many other developing countries. Since joined WTO in 2001, IP protection has been significantly improved in China. In my previous pharmaceutical company in China, all employees (~2,000 people) are trained to protect IP and all of them know the serious consequence of IP violations and leaking any secrets.

Many Chinese are buying medicines from India, "Pharmacy of the World". For example, Solvadi is sold at $1000 per pill in USA but not available in China because China promised to obey the rules since 2001. However, Solvadi is sold at only $10 per pill in India, because Indians totally neglect US Patents. Obviously, India is stealing American technology and violating US patents at a much deeper degree than China do.

Why it is fine for India but punish China? I think it's more about politics than about the truth.

US-China trade is like 1 million shoes made in China for a Boeing plane made in USA. It was regard as a complementary advantages trade. But now Trump think it is not fair for US. On the other hand, Chinese think that is not fair for China because 1 million items for only 1 item.

I think neither US nor China will win the trade war but many people in both sides would lost their jobs.
Bill (March 28, 2018 3:21 PM)
There will always be winners and losers. Should the US let china dump steel and aluminum to save other industries?
Overall, is china taking advantage of the US and other nations? The answer is obvious. Trump is a negotiator, let him get on with it.

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